US-based IT major Cognizant announced to lay off more than 9,000 people during the April-June quarter, as part of its strategy to reduce costs and fund investments for growth. On March 31, the company had 2,91,700 employees globally, which now stands at 2,81,200 (as of June 30).
It had a quarterly annualised attrition of 24 per cent and quarterly annualised voluntary attrition of 11 per cent. This implies involuntary attrition of 13 per cent. Back of the envelope calculations show that the company may have laid off over 9,000 employees in a quarter, as it is struggling to bring back growth amidst pandemic.
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Cognizant CEO Brian Humphries said, “Faced with the unprecedented challenges of the global pandemic and the ransomware attack that impacted our operations, we executed well. Revenue decline included a negative 120 basis points impact from the exit of certain nonstrategic content services business, which we announced in Q3 2019. Revenue growth in bookings momentum improved through the second quarter and we remain confident that our digital, clients, industry, and geographic revenue mix positions us favorably,”
According to sources, not all the 9,000 employees were terminated by the Company but were moved to another payroll. Almost 4000 employees who were part of Cognizant’s content moderation segment moderated offensive content for Facebook. When this segment was terminated late last year, these employees, the source said, were moved out of Cognizant’s payroll to another vendor that now provides the same services to Facebook.
The company reported a 29% decline in net profit in Q2 to $361 million as against $509 million for the same period last year. Revenues came in at $4 billion, a 3.4% decline.
Cognizant informed that the macroeconomic environment remains uncertain in light of the pandemic. However, it did give a guidance. For the full year 2020, the company expects revenue to decline in the range of 2% to down 0.5% year-over-year in constant currency.
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